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TMI Blog2024 (5) TMI 1067X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the issue in favour of the assessee. The Tribunal had examined in detail the agreement entered into by the assessee with its payee and the nature of services rendered, etc. Thereafter, it was concluded by ITAT that the payments cannot be attributed as FTS and assessee cannot be made liable under section 201 of the Act. In light of the above orders of the Tribunal which was confirmed by the Hon ble High Court [ 2023 (3) TMI 422 - KARNATAKA HIGH COURT ] in assessee s own case for Assessment Years 2011-12 to 2017-18, we reject the contentions raised by the Department. - SHRI GEORGE GEORGE K, VICE PRESIDENT AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER For the Appellant : None For the Respondent : Shri. G. Manoj Kumar, CIT(DR)(ITAT), ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing located in India, the payer being in India, India being following source rule, the exception to Section 9(1)(vii)(b) of the Act is not attracted? Whether in the facts and circumstances of the case, the Lcl. CIT(A) was right in failing to appreciate that the services rendered by the US entity are in the nature of managerial / consultancy, for which 'make available' is not applicable, and proceeding on the basis that payment was towards technical knowledge, skill, know-how, process or transfer of technical plan or design, the same not being made available, the same would not fall within the ambit of FTS? 4. Brief facts of the case are as follows: The AO had made an addition of Rs. 11,84,47,825/- and Rs. 23,03,47,626/- for Assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ince the assessee had failed to deduct tax at source under section 195 of the Act on such FTS payments, the amount of Rs. 11,84,47,825/- and Rs. 23,03,47,626/- was disallowed by invoking the provisions of section 40(a)(ia) of the Act. 6. Aggrieved, assessee filed appeals before the CIT(A) for Assessment Years 2016-17 and 2017-18. The CIT(A), by following the Tribunal order which was confirmed by the Hon ble High Court for the Assessment Years 2011-12 to 2017-18, decided the issue in favour of the assessee. The CIT(A) held that the payments cannot be termed as FTS and directed the AO to delete the additions. 7. Aggrieved by the Orders of the CIT(A) for Assessment Years 2016-17 and 2017-18, Revenue has filed the present appeals before the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al (IPR), and it is commonly not available to anyone but has to pay royalty and use it for years (as per agreement). Whereas, in the case of the term 'technical services' in the Article provides that those services which are not available to the entity, and it uses the technical/specialized skill of other entity, which is located outside the country. Suppose the entity(host), which has the effective technical/specialized skill is making it available to the entity (home), which lacks such specialized skilled person. The underlying thing is technical service/consultancy services, and it is commonly not available to the entity(home), which is made available by rendering such services. I submit few things to substantiate my arguments fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis of issue/problem or on case to case it may differ. If each such technical service is imparted in such a way the receiver gets the skill/knowledge, then it may come under the purview of process or design, for which royalty will be applicable. Also imparting knowledge may amount to training, it will lead to 'Fees for Training Services' and not 'Fees for Technical Services'. Example for simple understanding, 'A' entity gets legal issue and it takes the service of Mr. X person (CA), who is under the employment of 'ABC' (an entity). Now 'X' deals with it and solves the issue. 'ABC' has provided technical/specialized services to 'A'. I put forth few questions below to substantiate my poi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to distinguish the factual difference between Assessment Years 2011-12 to 2017-18 (the Assessment Years for which adjudication was made by the ITAT under section 201 of the Act, which was confirmed by the Hon ble High Court). 9. None was present on behalf of the assessee. However, we proceed to dispose off the appeals on merits after hearing the learned DR. 10. We have heard the learned DR and perused the material on record. The issue involved is payment made by the assessee company for marketing services to M/s. AMSI. The AO held that the payment is taxable in India as FTS and since TDS has not been deducted under section 195 of the Act, the said payments were disallowed by invoking the provisions of section 40(1)(ia) of the Act. The A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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